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[2010] ZAWCHC 560
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View Of Waves at Wilderness Development (Pty) Ltd v Leilani Restaurant (Pty) Ltd (16698/2010) [2010] ZAWCHC 560 (16 November 2010)
IN THE HIGH COURT OF SOUTH
AFRICA
(EASTERN
CIRCUIT LOCAL DIVISION, GEORGE)
CASE NUMBER:
16698/2010
DATE: 16
NOVEMBER 2010
In
the matter between:
VIEWS
OF THE WAVES AT WILDERNESS
DEVELOPMENTS
(PTY) LTD
…............................................................................................................
Applicant
and
LEILANI
RESTAURANT (PTY) LTD
….............................................................................................
Respondent
JUDGMENT
FOURIE,
J:
The
applicant has approached the court on an urgent basis for an order
ejecting respondent with immediate effect from the two restaurants
and the kitchen in the building known as The Views Boutique Hotel,
Wilderness, Western Cape Province. Respondent opposes the
application.
Due to time constraints during a busy circuit, I do not
intend traversing the allegations of the parties in any great detail.
I
will merely summarise the main issues and provide brief reasons for
the order which I intend to make. I, therefore, accept that
any
person interested in this judgment is fully conversant with the
content of the affidavits filed by the respective parties.
It
is common cause that applicant is the registered owner of the
immovable property on which the boutique hotel, which includes
the
two restaurants and kitchen, has been erected. It is also common
cause that respondent is currently in occupation of the two
restaurants and the kitchen ("the restaurants"). The
respondent's defence against the applicant's rei vindicato is that
the parties concluded a verbal agreement of lease during February
2010, in terms of which applicant let the restaurants to respondent
for a period of 10 years, with an option to renew it for a further 10
years. Applicant denies the existence of the lease agreement
and it
is common cause between the parties that respondent has the onus of
proving the existence of the verbal agreement of lease.
Applicant
seeks final relief on motion and, as I have indicated, it is faced by
a dispute of fact on the papers. Applicant, however,
contends that
when this defence of respondent is scrutinised, it does not create a
real dispute of fact. Applicant accordingly
argues that it is
entitled to final relief by way of these motion proceedings.
Respondent, on the other hand, contends that
a genuine dispute of
fact has arisen, which bars the applicant from seeking relief of a
final nature by way of these proceedings.
I
should mention that at the outset, Mr
Coetsee
,
for applicant, reiterated that applicant does not seek a referral of
any issue for the hearing of oral evidence and that it accordingly
stands or falls by the decision to have the matter adjudicated on the
affidavits alone. The attitude of Mr
Massel
,
on behalf of respondent, was that by virtue of the dispute of fact,
coupled with applicant's decision not to seek an order referring
any
issues to evidence or trial, the application should be dismissed with
costs.
It
is trite law, as emphasised by
Corbett
,
JA in
Plascon-Evans
Paints v Van Riebeeck Paints
[1984] ZASCA 51
;
1984
(3) SA 623
(A), that, where in proceedings on notice of motion,
disputes of fact have arisen on the affidavits, a final order may
only be
granted if those facts averred in the applicant's affidavits,
which have been admitted by the respondent, together with the facts
alleged by the respondent, justify an order. Mr
Coetsee
,
however, emphasised the well-known exception to this general rule,
which was enunciated by
Corbett
,
JA in
Plascon Evans
as follows at 634I-635C:
"In certain instances the
denial by the respondent of the facts alleged by the applicant, may
not be such as to raise a real,
genuine or bona fide dispute of fact.
Moreover, there may be exceptions to this general rule as, for
example, where the allegations
or denials of the respondent are so
far-fetched or clearly untenable that the Court is justified in
rejecting them merely on the
papers."
The
approach which a Court should follow in circumstances such as the
present, was conveniently summarised as follows, with reference
to
the authorities, by
Van
Reenen
, J, in
Nampesca SA Products
(Ptv) Limited & Another v Zaderer & Others
1999
(1) SA 886
(C) at 892I-893B:
"Where there are disputes
of fact, a Court can decide the issues only if it is satisfied that
there are no real and genuine
disputes of fact; that the respondent's
allegations are so far-fetched or untenable that their rejection
merely on the papers is
warranted, or that viva voce evidence will
not disturb the probabilities appearing from the affidavits. Although
it is undesirable
to endeavour to resolve disputes of fact on
affidavit without the hearing of evidence and seeing and hearing
witness before coming
to a conclusion, it is equally undesirable to
accept disputes of fact at face value, because if that were done, an
applicant could
be frustrated by the raising of fictitious issues of
fact by a respondent. Accordingly a Court should in every case
critically
examine the alleged disputes of fact in order to determine
whether in truth there is a dispute of fact that cannot be
satisfactorily
determined without the aid of oral evidence."
In
view of the aforegoing, I am called upon to adjudicate this matter,
not by deciding whether the existence of the lease agreement
relied
upon by respondent, has been proved on a balance of probabilities or
not, but by deciding whether the respondent's allegations
in this
regard are to be regarded as fictitious or so far-fetched or
untenable that they do not create a real and genuine dispute
of fact,
with the result that their rejection merely on the papers is
warranted. At the risk of being guilty of repetition, I wish
to
emphasise that the finding which I will in due course make, is not
whether or not the existence of the alleged agreement of
lease has
been proved, but whether respondent's reliance thereon, together with
applicant's denial thereof, give rise to a bona
fide dispute of fact.
The
respondent's version as to the conclusion of a verbal agreement of
lease during February 2010, has to be scrutinised against
the
following backdrop provided by the common cause facts:
(a)
There
are three separate legal entities which occupy space in appellant's
immovable property, namely;
(i)
The Views Boutique Hotel (Pty)
Limited.
(ii)
The
Views Spar (Pty) Limited.
(iii)
The
respondent.
(b)
Respondent took occupation of the restaurants in October 2009. Since
then it has conducted
the business of a restaurateur from these
premises under the name and style of the "Sails" and
"Flagship" restaurants.
(c)
Respondent paid the expenses relating to the fixtures and fittings of
the two restaurants,
amounting to approximately R4 million.
(d)
At some stage during 2009, Mr Du Toit, the director of applicant,
made application to the
National Department of Trade and Industry
("DTI") for a monetary grant of R10 million. In order to
qualify for this grant,
the various businesses conducted on the
immovable property of applicant would need to operate as one entity.
After Mr Bloemsma
of respondent had been advised by Du Toit of the
DTI's requirement, negotiations relating to a possible merger of the
businesses
of applicant, respondent and The Views Spa (Pty) Limited,
took place. These negotiations were unsuccessful and finally broke
down
during the middle of 2010.
|
(e)
After these negotiations had broken down, applicant's attorneys
addressed a letter to respondent
on 16 July 2010, notifying the
latter that there is no formal lease agreement between applicant and
respondent, and, by necessary
implication, the occupation of the
restaurants by respondent is on a month to month basis. Notice was
then given to respondent
to vacate the restaurants on or before 31
August 2010.
(f)
Respondent's attorneys responded by means of a letter dated 30 July
2010, in which
they recorded respondent's instructions that a lease
agreement in respect of the restaurants is in existence. Details of
the conclusion
of the agreement of lease and its material terms, were
set out as follows in this letter and I quote from pages 21 and 22 of
the
papers, particularly as from paragraph 8 of the letter:
"8.
From the last quarter of 2009 until the end of the first quarter in
2010, our respective clients negotiated the terms of
the lease
agreement. Our client, duly represented by Mr Johan Bloemsma and your
client, duly represented by Mr Theo du Toit, concluded
an oral
agreement of lease in and around February 2010. The material terms of
the lease agreement are, inter alia, as follows:
8.1
The premises let by your client to our client, are those currently
occupied by our client and
from which our client owns and operates
two restaurants, namely Sails Restaurant and Flagship Restaurant,
both of which include
space of two outside decking areas.
8.2
The effective commencement date of the lease is 1 October 2009.
8.3
The tenure of the lease is for a period of 10 years from commencement
of the lease, with an option
to renew by our client for a further 10
years on the same terms and conditions.
8.4
The rental payable by our client, monthly in arrears, is as follows:
8.4.1
For the month of October 2009, R24 997,00.
8.4.2
For the month of November 2009, R33 712,00.
8.4.3
For the month of December 2009, R128 702,00.
8.4.4
For the month of January 2010, R151 003,00.
8.4.5
For the month from February 2010 and for each consecutive month
thereafter until expiration of the
agreement, an amount of R132
000,00 as rental and an amount of R8 000,00 for lights, water,
maintenance, insurance and other ancillary
building costs not
directly related to the premises.
8.5
Our client will pay amounts due to the Council for water and
electricity consumed by it on the
restaurant premises.
8.6
The rental payable by our client to your client will escalate at 9%
per annum on the anniversary
of the commencement date of the lease.
8.7
Our client would improve the premises let to it.
The amount spent by our client
on the premises would be regarded as a
contribution towards the rental for the entire period of the 10 year
lease.
9.
We point out that our respective clients, duly represented, agreed
that the parties would meet in good faith in an attempt to
agree by
way of negotiation a reduction of the rental payable from 1 October
2010. The rental amount would be a reasonable rental
in the form of a
base rental plus turnover rental, having regard to, inter alia, the
premises, affordability, our respective clients'
cash flow
requirements and a return on investment for shareholders of your
client. Our client tenders to meet with your client
in order to reach
agreement of the reduced rental."
The
central theme of Mr
Coetsee
's submissions in argument on
behalf of applicant, was that, although it was initially the
intention of the parties that a lease
agreement would be entered
into, the application for the DTI grant meant that a lease agreement
was not on the table any longer
and, therefore, there would not have
been any negotiations for a lease agreement between applicant and
respondent. He argued that
what the papers show, is that negotiations
for a merger between the businesses to be conducted from these
premises were afoot and
when these negotiations finally broke down in
July 2010, there was no agreement of lease in existence and, at best
for respondent,
it then occupied the premises in terms of a tacit
monthly tenancy, terminable on one month's notice.
It
would be apposite at this stage to have regard to what appears to be
a change in stance by applicant in regard to the nature
of
respondent's occupation of the restaurants. In the founding
affidavit, Du Toit, on behalf of applicant, took the position that
in
view of the pending DTI grant, the parties anticipated the conclusion
of a contract for the management of the restaurants and
not for the
leasing of the restaurants. He contended that respondent took
occupation of the restaurants without a lease agreement
being entered
into. In paragraph 6.11 of the founding affidavit, Du Toit says that:
"A lease agreement for the
restaurants was, therefore, not an option and was not considered."
Further
in paragraph 7.3, Du Toit categorically states that:
"No contract of lease was
entered into between applicant and the respondent, not in writing or
verbally or tacitly."
In
paragraph 18.1 of applicant's replying affidavit, however, it is
conceded by Du Toit that it was initially the intention of the
parties that a lease agreement would be entered into, but that the
application for the DTI grant meant that a lease agreement was
no
longer on the table. This was also the submission of Mr
Coetsee
at the hearing of the matter. From this it follows that respondent
is, at least, correct in its contention that it took occupation
of
the restaurants at a time when it was the intention of the parties
that a lease agreement would be entered into. This much is
clear from
paragraph 22.8 of the replying affidavit where Du Toit concedes that:
"It was indeed a matter of
the respondent renting from the applicant on a month to month basis
in anticipation of the merger
and the payment of the DTI grant."
In
regard to this change of stance, Mr
Massel
,
who referred to it more enthusiastically as a volte-face, also
pointed to documentation annexed to respondent's answering affidavit,
indicating payments made by respondent to applicant for the period
October 2009 up to and including January 2010, which were referred
to
by applicant as rental. See Annexures JB3A and JB3B to respondent's
answering affidavit, in which the payments are referred
to as
"contribution to rent as detailed in cash flow forecast".
There is much to
be said for the submission of Mr
Massel
,
that this change of stance was probably brought about by applicant
being faced with its own
invoices for payment of rental, annexed
to the replying affidavit as JB3A and B.
Respondent
also alleges in its opposing affidavit that:
"Prior to this application
and attorneys having been introduced, the applicant has received
rental and other payments without
demure."
The
other payments referred to by the respondent were made in respect of
services such as electricity, water, etcetera. Mr
Coetsee
submitted that these rental
payments should be seen for what they are, namely contributions
towards applicant's cash flow, pending
the payment of the DTI grant.
However, the fact of the matter is that these amounts were paid by
respondent to applicant as a quid
pro quo for the right to occupy the
restaurants. It, therefore, constituted rental payments which is the
label given to it by applicant.
It
should also be borne in mind that in the letter of respondent's
attorneys dated 30 July 2010, it is alleged that the parties
agreed
during February 2010 that these amounts in respect of the period
October 2009 to January 2010, would be payable in arrears
as rental.
Payment thereof was made on 16 February 2010, see Annexure JB4 to the
opposing affidavit, in an amount of R385 769,16,
which corresponds
exactly with the amount indicated as the rental due on applicant's
tax invoice, as per Annexure JB3B. To this
extent the objective facts
support the existence of the terms of the verbal agreement of lease
contended for by respondent, as
set out in subparagraphs 8.4.1 to
8.4.4 of respondent's attorneys letter dated 30 July 2010.
To
summarise, at this stage one has a situation where the respondent
took occupation of the restaurant in October 2009, with the
parties
intending to conclude an agreement of lease. Respondent spent
approximately R4 million in kitting out the restaurants and
has been
conducting the business of a restaurateur on the premises since
October 2009 to date hereof. Applicant now concedes that,
at least
until middle 2010, respondent occupied the restaurants as a lessee,
although applicant maintains that it was only a monthly
tenancy by
virtue of a tacit lease which had come into existence. During the
period of its occupation of the restaurants, respondent
also made
payment of amounts to applicant, which, as I have already described,
applicant attached the label of rental payments.
It
is now necessary to scrutinise respondent's contention that during
February 2010, the parties reached agreement on the additional
contentious terms, recorded in the letter of respondent's attorneys
dated 30 July 2010. In particular, that a lease for a period
of 10
years, with an option to renew for a further 10 years, had been
agreed upon, at a monthly rental of R132 000,00 with effect
from
February 2010, together with payment of an amount of R8 000,00 per
month in respect of ancillary expenses. In this regard,
Mr
Coetsee
argued that it would not have made sense for the parties to have
negotiated a merger for purposes of the DTI grant, on the one
hand,
while, on the other, a verbal agreement of lease on these
contradictory and contentious terms would have been concluded.
I
believe that it is important to bear in mind that there is no
consensus on the papers as to the actual knowledge of the respective
role players and their state of mind at the crucial stages of the
relevant events. Contrary to Du Toit's contention that the parties
were involved in protracted negotiations and extensive planning from
May 2009, to ensure a successful application to the DTI for
a grant,
Bloemsma maintains that, although he was made aware during mid 2009
of an application to the DTI for a grant, he was unaware
of the terms
and conditions that the DTI attached to the application, nor, says
he, did he have sight of the application to the
DTI. He says that it
was only in early 2010, that Du Toit advised him that, in order to
qualify for the grant, the various businesses
would need to operate
as one entity.
Applicant
has, in reply, annexed e-mails as Annexures R3 and R6, in an attempt
to show that before May 2009, Bloemsma did not only
have knowledge of
the DTI application, but that he was also involved therein. In
paragraph 25.4 of the replying affidavit, Du Toit
also alleges that:
"There is more proof
available that Bloemsma was part and parcel of the discussions and
negotiations regarding the DTI grant
that preceded the start of
2010."
This
additional proof, was, however, not annexed to the replying
affidavit, apparently to avoid prolixity. Du Toit further stated
that
such correspondence would be made available at the hearing of the
application, but no further documents were forthcoming.
Annexures R3
and R6 to the replying affidavit, do not necessarily gainsay
Bloemsma/
-
version in any material respects. R3 is dated 8
April 2009 and relates to a budgeted 10 year income statement of the
restaurants
"for inclusion into the structure we discussed last
month". It does not refer to the DTI grant at all and does not
say
what the nature of the structure referred, to would be. In the
ultimate sentence, Bloemsma does refer to the structuring of a
"combined
entity", but the e-mail is silent as to the
nature or purpose thereof, nor does it disclose that it would be in
regard to
the DTI grant. Annexure R6, dated 27 March 2009, was sent
to various parties, including Bloemsma, by one Gail Mills of
applicant,
requesting more information "for the DTI subsidy
application", but it does not show that Bloemsma was at that
stage aware
of the terms and conditions of the relevant DTI
application.
An
important factor to bear in mind, in my view, is that the Court has
not been presented with any documentation relating to the
DTI
application and the grant thereof. In this regard documentation of
the following nature comes to mind. The written application
made to
the DTI; the conditions for approval laid down by the DTI; the letter
of approval and any conditions attached to such approval;
correspondence between the parties, in particular between applicant
and respondent prior and subsequent to the application being
made and
the approval thereof by the DTI; minutes or notes or memoranda
relating to meetings and discussions between applicant
and respondent
and correspondence between applicant and/or respondent, with third
parties regarding the prospective DTI grant.
What
I basically have is the say-so of the parties. This illustrates the
disadvantage of a Court having to decide a disputed matter
on
affidavit. Not only is such documentary material absent, but the
Court does not have the advantage of seeing and hearing the
witnesses
and having their credibility tested by means of oral evidence and
cross-examination.
To
return to the crucial issue, i.e. can the version of respondent,
regarding the conclusion of the oral agreement of lease, be
dismissed
out of hand as fictitious, far-fetched or untenable. It may be that
this version can be criticised as improbable in certain
respects.
Particularly, seen from the applicant's point of view, it seems
rather improbable that, while applicant was aware that
to qualify for
the DTI grant the businesses had to be conducted as an entity, it
would have concluded a 10 year lease whilst still
awaiting the
outcome of the DTI application. However, viewed from the perspective
of the respondent, the conclusion of the agreement
of lease seems not
only to have been logical, but imperative from a business point of
view. It seems rather improbable that respondent
would have invested
R4 million on the strength of a tacit monthly tenancy, which could at
any stage be terminated on one month's
notice by applicant,
especially in circumstances where the parties actually envisaged the
conclusion of an agreement of lease,
particularly at the time when
respondent first took occupation of the restaurants.
I
should add that the change of stance of applicant, referred to
earlier, raises some concern. The initial version of applicant
was
that, as applicant was in the process of applying for the DTI grant
prior to October 2009, when respondent took occupation
of the
restaurants, there was no talk at all of an agreement of lease to be
entered into. In the founding affidavit, as I have
indicated earlier,
Du Toit says that what was anticipated was a contract for the
management of the restaurants. In the replying
affidavit, however, he
concedes that it was initially the intention of the parties to
conclude a lease.
On
applicant's version the parties were involved in negotiations and
planning to ensure a successful application for a DTI grant
since May
2009. So why would it then have been the initial intention to
conclude a lease? Be that as it may, one also has to take
into
account the respondent's version of events regarding the DTI grant.
Bloemsma states that Du Toit had intentionally misled
the DTI into
believing that the property and the businesses thereon were owned by
one entity. He says that it was only after Du
Toit became aware of
the DTI grant being awarded to applicant, that he commenced
negotiations between applicant and the other businesses
for a merger.
Bloemsma
then asks what appears to be a valid question, namely, if there was
no lease agreement, why would applicant wish to merge
its business
with respondent who has no security of tenure and may at any stage be
ejected at will by applicant. According to Bloemsma,
these
negotiations broke down during middle 2010, with the result that
respondent is still entitled to occupation in terms of the
concluded
agreement of lease.
On
reflection, I am not convinced that this version of respondent can be
described as fictitious or so far-fetched or untenable
that it can be
rejected merely on the papers. As I have indicated, there are not
only disputes of fact as to the crucial issues,
but the probabilities
can also be said to be in favour and against both versions. However,
neither version is, in my opinion, so
improbable that it can be
rejected out of hand. I am of view that the only way in which the
truth can be established is to hear
oral evidence after proper
discovery of all relevant documentation by the parties. However, as
indicated earlier, this is not the
route that the applicant wishes to
follow. I may add that, as the applicant had been fully apprised of
the basis of respondent's
defence prior to the bringing of this
application, I may, in any event, have been rather hesitant to refer
the matter for the hearing
of oral evidence.
I
should add further that, in paragraph 18.5 of its replying affidavit,
the applicant has criticised the material terms of the lease
agreement on which respondent relies in various respects, but what
this amounts to is an invitation to the Court to determine the
probabilities. That the Court cannot do, as motion proceedings,
unless concerned with interim relief, are all about the resolution
of
legal issues based on common cause facts. See the remarks of
Harms
,
DP in
NDPP v Zuma
[2009] ZASCA 1
;
2009 (2) SA 277
(SCA) at 290.
It
follows that the application cannot succeed. The application is,
therefore, dismissed with costs, including the costs of 14 September
2010.
FOURIE, J